The Bogleheads’ Guide to Investing: Chapters 17 – 23

As an investor with Vanguard and an occasional visitor to the forum, I’ve been looking forward to reading for a while now. It’s a guide to how to invest your money written based on the principles of Jack Bogle, the founder of Vanguard. Is it a good read for you? Let’s find out.

Chapter 17 – Track Your Progress and Rebalance When Necessary
When you invest, even in a “buy and hold” philosophy as advocated by this book, you need to keep tabs on what’s going on, and you should make adjustments when necessary. Generally, the Bogleheads seem to believe in rebalancing every 12 to 18 months. How do you rebalance? Basically, it simply comes down to moving your investments so that they match what you’ve decided your portfolio should be like. For example, let’s say you want to have 80% stocks and 20% bonds in your portfolio, so you make it so. Eighteen months later, the value of your portfolio is 83% stocks and 17% bonds, so you move that 3% where it should be. Eighteen months after that, your portfolio is 74% stocks and 26% bonds, so you move that 6%.

Chapter 18 – Tune Out the “Noise”
Most of the people who spout financial advice are full of hot air. Ignore people who come at you with a “killer investment” or a “great tip” and stay focused on fundamentals: a broad, diverse investment that will grow well over the long haul. Hopefully, people who watch shows like Mad Money realize that they’re entertainment more than anything. If you take nothing from this review, do your homework before following anyone’s advice, including mine.

Chapter 19 – Mastering Your Investments Means Mastering Your Emotions
Panic. Fear. Greed. Overconfidence. These things strike everyone. The best ways to overcome them are by focusing on things that are provable and the logic that has worked for you in the past. Don’t believe in hype and don’t run in fear based on recent history; this is a common mistake called recency bias. Look for the long term and plan for the long term and you’ll be fine.

Chapter 20 – Making Your Money Last Longer Than You Do
This chapter basically boils down to one central idea: put plenty of money away, and then make sure you’re not spending so much of it that you could ever go broke in retirement. This means figuring on the very high end when calculating what you’ll need in retirement and then saving for it starting as soon as you possibly can.

Chapter 21 – Protect Your Asses by Being Well-Insured
This book is all about being a great risk manager, and insurance is all about managing risk, so it’s unsurprising that this chapter encourages you to insure yourself thoroughly and well, on everything from strong life insurance to health insurance to long-term disability insurance.

Chapter 22 – Passing It On When You Pass On
Finally, the book gets around to talking about wills, living trusts, power of attorney, and living wills. Basically, it boils down to making sure that the money you’ve been working so hard to earn throughout your life has a safe long-term home with your descendents and other institutions that you care about.

Chapter 23 – You Can Do It
This final chapter is basically just a review of the concepts throughout the book and some strong encouragement to get started now and build a lifetime of sound financial planning; a solid capper to the book.

Tomorrow, I’ll give a “buy or don’t buy” recommendation for the book.

The Bogleheads’ Guide to Investing is the nineteenth of fifty-two books in’s series 52 Personal Finance Books in 52 Weeks.

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